Insurance underwriting can sometimes feel like climbing a mountain and working against gravity. The higher you go, the more energy you have to expend to make progress. (Credit: chaiyapruek/AdobeStock)
Growing an insurance company can feel like an uphill battle. You're constantly fighting against the friction caused by internal and external forces. Even when you start to gain altitude, any slight misstep can send you stumbling right back to where you started.
There is a better way. By investing in underwriting automation, you can unlock perpetual momentum.
What is perpetual momentum?
Insurance growth is often depicted as an upward trajectory. Your team attempts to simultaneously push business volume and underwriting profits higher, but the efforts of one endeavor can be counter-productive to the other. It's like climbing a mountain and working against gravity. The higher you go, the more energy you have to expend to make progress.
The idea of perpetual momentum presents a more efficient way to unlock growth. Essentially, you want your growth process to power itself. This way, business growth keeps building without additional resources, ultimately creating a cycle of continuous growth.
Building your business doesn't have to be an upward slog. With a perpetual momentum model, business growth builds on itself.
Start with underwriting automation
Obviously, every insurer would rather experience easy, self-supporting growth using the perpetual momentum model instead of difficult and painstaking growth via the traditional model. So, what's stopping them? They often don't know where to start. Should they focus on marketing, sales, claims or underwriting?
For the insurance industry, the natural starting point is underwriting because it is the gatekeeper of new business and profitability. Even if marketing and sales are successful, an inefficient underwriting process can asphyxiate growth. Once your underwriting machine is humming, you can tap into a continuous cycle of progression.
Four common underwriting stumbling blocks
When you're trying to grow your insurance business, common stumbling blocks can send you off track. Underwriting automation is critical to overcoming these barriers and staying on course for growth. Here are four ways underwriting automation can help overcome growth barriers.
Barrier No. 1: Talent crisis
Many people in the insurance industry are talking about a talent crisis. Finding skilled insurance workers — or new workers who are dedicated to learning the ropes of the insurance industry — is increasingly difficult.
This leaves the industry with a limited number of experienced underwriters, and those underwriters are overwhelmed with administrative tasks.
This is a major impediment to growth. Insurers can't grow if they can't underwrite more policies, and they can't underwrite more policies if their underwriters are too busy dealing with repetitive data entry to focus on high-value tasks.
How to improve talent allocation
Insurers want to improve recruitment and retention. They also want to support smart underwriting decisions. Automated underwriting can help on both counts.
Instead of burying underwriters with mundane administrative tasks, insurers can give underwriters the freedom to focus on high-value tasks. When automation covers some of the workload, underwriters have more time to devote to activities that support growth.
This can also make underwriting more appealing to new workers. Think about it; talented people prefer to engage in work that makes a difference. By empowering underwriters with automation, we can make underwriting more rewarding.
Barrier No. 2: Inaccurate underwriting
Getting information from disparate sources can cloud the big picture.
Submissions involve multiple documents and underwriters need a simple way to extract data and feed it into a core system. Otherwise, they spend significant time reviewing and collating information.
All of this results in wasted time. Even worse, it can lead to underwriting inaccuracy, and poor decisions.
How to gain intelligence
Say goodbye to time-consuming data entry. Automated underwriting takes all relevant information and puts it into one comprehensive system. Underwriters can access the insights they need to make intelligent decisions, in significantly less time.
Automated underwriting can also leverage third-party data to verify information at a speed that humans aren't capable of achieving. The result is fast, more accurate underwriting.
Barrier No. 3: Low risk appetite
When inaccurate underwriting leads to reduced underwriting profitability, insurers often respond by reducing capacity. It makes sense. If insurers are losing money on bad risks, they need to rein in their underwriting capacity before they lose even more.
Unfortunately, this approach doesn't just limit risk. It also limits growth. If insurers refuse to take on certain accounts, or if they offer lower limits and more restrictive coverage, they miss out on opportunities to gain new policyholders and expand into new niches.
How to capture new opportunities
Top-performing insurers excel at underwriting. After all, underwriting is at the core of insurance operations. Accurate underwriting is how you control your loss ratio, and that plays a key role in your overall success.
Automated underwriting leverages external and internal data to create more accurate results. With underwriting automation, you can eliminate human error and identify anomalies, all at a speed that wouldn't be possible with manual operations. This allows you to take on more business while protecting your bottom line.
Barrier No. 4: Agent retention
You need high-performing agents to enthusiastically quote your products. If your processes create an unpleasant agent experience, that's not going to happen.
Put yourself in the agent's shoes. If quoting and binding are difficult or decisions are slow, agents don't look good. If you decline coverage or offer poor terms, it's even worse.
Agents want to deliver positive, successful experiences. If you can't deliver, they'll explore other options.
How to earn agent loyalty
Automated underwriting speeds up the quoting, binding and decision processes, enabling agents to deliver faster results.
Because automated underwriting may also increase an insurer's risk appetite, it can also result in more successful placements.
Furthermore, automated underwriting can improve agent-underwriter communication by providing automatic updates and freeing up underwriter time for quality communication.
Perpetual momentum possibilities
When you adopt underwriting automation, you achieve superior risk analysis and underwriting effectiveness. This leads to better data and an improved understanding of what's happening and why — enabling you to increase your risk appetite, supporting happier agents who submit more applications.
In turn, you approve or respond to applications faster, and with better data available, your interactions are more meaningful — driving increased profit and starting the cycle of business growth anew.
When you adopt underwriting automation, you achieve superior risk analysis and underwriting effectiveness. (Graphics provided by Liberate Innovations Inc.) The foundation for continuous evolution of underwriting discipline
All of this is possible with a cutting-edge, all-in-one system. Imagine a program that can do the following:
- All information from multiple data sources is combined into a single application, giving underwriters a clear understanding of each submission and reducing the busy work involved in trying to pull data from disparate systems. Smart queuing ensures that each underwriter knows exactly what they need to do and what their priorities for the day are.
- External data provides insights to improve underwriting accuracy. Underwriters can access risk insights and rating factors, and they can see how changes would impact rates — all while staying inside the application. The system can also automatically detect and flag anomalies for review.
- Underwriter and agent relations flourish with better information and dialogue. Underwriters can review agent information to take their past performance and rating into account, and messaging tools facilitate communication without ever having to leave the application, thereby removing the friction that can impede communication flow.
Such a process would completely revolutionize underwriting. Thanks to emerging technologies, it's now within reach.
The future of insurance: AI-driven underwriting
Much like the internet revolutionized the way we access information, AI is transforming the way we work. There's no doubt that the future of insurance will involve AI-driven processes, and the evolution of underwriting holds great potential. Perpetual momentum is finally possible — will you seize the opportunity?
Amrish Singh is the CEO of Liberate Innovations Inc., a software-as-a-service (SaaS) platform for the P&C insurance industry that fully automates claims and underwriting journeys enabling insurers to deliver an exceptional customer experience at the industry's lowest cost. For more information, visit www.liberateinc.com.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.